SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
ENGELHARD CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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[LOGO] 101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
ORIN R. SMITH
Chairman and
Chief Executive Officer
March 31, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders,
which will be held at 10 a.m., Eastern Daylight Savings Time, on Thursday, May
7, at The Sheraton at Woodbridge Place, 515 Route 1 South, Iselin, N.J. 08830.
The enclosed Notice and Proxy Statement contain complete information about
matters to be considered at the Annual Meeting, at which the business and
operations of Engelhard will also be reviewed. Discussions at our Annual Meeting
have generally been interesting and useful, and we hope that you will be able to
attend. If you plan to attend, please check the box provided on the proxy card
and an admission ticket will be sent to you. Only shareholders and their proxies
will be permitted to attend the Annual Meeting.
Whether or not you plan to attend, we urge you to complete, sign and return
the enclosed proxy card, so that your shares will be represented and voted at
the Annual Meeting.
Sincerely yours,
[LOGO]
ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
-------------------
NOTICE OF THE 1998 ANNUAL MEETING OF SHAREHOLDERS
-------------------
To our Shareholders: March 31, 1998
The Annual Meeting of Shareholders of Engelhard Corporation, a Delaware
corporation, will be held on Thursday, May 7, 1998 at 10:00 a.m., Eastern
Daylight Savings time, at The Sheraton at Woodbridge Place, 515 Route 1 South,
Iselin, N.J. 08830 for the following purposes:
(1) To elect four Directors;
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as independent
public accountants;
(3) To transact such other business as may properly come before the
meeting.
The record date for the determination of the shareholders entitled to vote
at the meeting or at any adjournment thereof is close of business on March 13,
1998.
A list of shareholders entitled to vote at the Annual Meeting will be open
to the examination of any shareholder, for any purpose germane to the meeting,
at the offices of the Company's Transfer Agent and Registrar, ChaseMellon
Shareholder Services, L.L.C., 120 Broadway, New York, New York 10271, during
ordinary business hours for ten days prior to the meeting.
By Order of the Board of Directors
ARTHUR A. DORNBUSCH, II
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
SHAREHOLDERS ARE URGED TO MARK, SIGN AND RETURN PROMPTLY
THE ACCOMPANYING PROXY IN THE ENCLOSED RETURN ENVELOPE
ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
------------------------
PROXY STATEMENT FOR THE 1998
ANNUAL MEETING OF SHAREHOLDERS
------------------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy, being mailed to shareholders on or about March 31,
1998, is solicited by the Board of Directors of Engelhard Corporation (the
"Company") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held on Thursday, May 7, 1998. In case the Meeting is adjourned, the proxy will
be used at any adjournments thereof. If a proxy is received before the Meeting,
the shares represented by it will be voted unless the proxy is revoked by
written notice prior to the Meeting or by voting by ballot at the Meeting. If
matters other than those set forth in the accompanying Notice of Annual Meeting
are presented at the Meeting for action, which is not currently anticipated, the
proxy holders will vote the proxies in accordance with their best judgment.
Holders of Common Stock as of the close of business on March 13, 1998 will
be entitled to vote. On such date there were outstanding and entitled to vote
144,605,129 shares of Common Stock of the Company, each of which is entitled to
one vote with respect to each matter to be voted on at the Meeting. The presence
at the Meeting in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote shall constitute a quorum
for the transaction of business. Proxies marked as abstaining (including proxies
containing broker non-votes) on any matter to be acted upon by stockholders will
be treated as present at the meeting for purposes of determining a quorum but
will not be counted as votes cast on such matters.
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited
personally, or by telephone, by employees of the Company. The Company has also
engaged D.F. King & Co., Inc., 77 Water Street, New York, New York, to assist in
such solicitation at an estimated fee of $14,000 plus disbursements. The Company
may reimburse brokers holding Common Stock in their names or in the names of
their nominees for their expenses in sending proxy material to the beneficial
owners of such Common Stock.
INFORMATION AS TO CERTAIN SHAREHOLDERS
Set forth below is certain information with respect to the only persons
known to the Company who owned beneficially more than five percent of the
Company's voting securities as of March 5, 1998.
AMOUNT
BENEFICIALLY PERCENT
OWNED OF CLASS
-------------- -------------
Minorco...................................................................... 45,963,180 31.8%(1)
9 rue Sainte Zithe, L-2763
Luxembourg City, Grand Duchy of Luxembourg
State Farm Mutual Automobile Insurance Company............................... 9,670,893 6.7%(2)
One State Farm Plaza,
Bloomington, Illinois 61710
- ------------------------
(1) The Company is informed by Minorco, a company incorporated under the laws of
Luxembourg, as a societe anonyme, as follows:
Minorco, through a wholly-owned subsidiary, holds 45,963,180 shares of Common
Stock of the Company, representing approximately 31.8% of the outstanding
voting securities of the Company. Shares granted to Messrs. Lea and Slack
pursuant to each of the Company's Stock Bonus Plan for Non-Employee
Directors and the Company's Directors Stock Option Plan have been ceded to
Minorco pursuant to arrangements between Messrs. Lea and Slack,
respectively, and Minorco and are included in the above total.
Minorco is an international natural resources company with operations in
gold, base metals, industrial minerals, paper and packaging and
agribusiness. The capital stock of Minorco is owned in part as follows:
approximately 45.6%, directly or through subsidiaries, by Anglo American
Corporation of South Africa Limited ("Anglo American"), a publicly held
mining and finance company, and approximately 22.5%, directly or through
subsidiaries, by De Beers Centenary AG ("Centenary"), a publicly held Swiss
diamond mining and investment company. Approximately 38.5% of the capital
stock of Anglo American is owned, directly or through subsidiaries, by De
Beers Consolidated Mines Limited ("De Beers"), a publicly held diamond
mining and investment company. Approximately 29.4% of the capital stock of
Centenary and approximately 32.5% of the capital stock of De Beers is owned,
directly or through subsidiaries, by Anglo American. De Beers owns
approximately 9.5% of Centenary.
Mr. Nicholas F. Oppenheimer, Deputy Chairman and a director of Anglo
American, and Chairman and a director of Centenary and De Beers and a
director of Minorco, and Mr. Slack, a director of the Company, Chief
Executive, President and a director of Minorco and a director of Anglo
American, have indirect partial interests in approximately 7.1% of the
outstanding
2
shares of Minorco and approximately 8% of the outstanding shares of Anglo
American. Mr. Slack holds an additional indirect interest in 23 Anglo
American Ordinary Shares, and his infant children hold a beneficial interest
of 900 shares in Minorco. Mr. Loomis and Mr. Smith are directors of Minorco.
Mr. Lea is a director of Anglo American and Minorco, and his infant son
holds a beneficial interest in 100 shares of Minorco.
(2) As reported by State Farm Mutual Automobile Insurance Company and related
entities on Schedule 13G filed with the Securities and Exchange Commission
and dated January 22, 1998.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of three classes, Class I,
Class II and Class III, each class serving for a full three-year term. Ms.
Alvarado, Mr. Loomis, Mr. Napier and Mrs. Pace, all of whom are incumbent Class
II Directors, are nominees for election as Class II Directors at the Annual
Meeting. If elected, the Class II Directors will serve three-year terms expiring
in 2001. The Class III Directors will be considered for reelection at the 1999
Annual Meeting. The Class I Directors will be considered for reelection at the
2000 Annual Meeting.
Messrs. Slack and Smith have been members of the Board of Directors since
1981, Mr. Richards since 1983, Mr. Antonini since 1985, Mr. Napier since 1986,
Mrs. Pace since 1987, Mr. Watson since 1991, Mr. Lea since 1994, Ms. Alvarado
since 1995, Mr. Loomis since 1996 and Mr. Perry since 1997.
Directors will be elected by the affirmative vote of a majority of the votes
cast at the Meeting.
The persons named as proxies in the accompanying proxy who have been
designated by the Board of Directors intend to vote, unless otherwise instructed
in such proxy, FOR the election of Ms. Alvarado, Mr. Loomis, Mr. Napier and Mrs.
Pace as Class II Directors.
3
INFORMATION WITH RESPECT TO NOMINEES AND
DIRECTORS WHOSE TERMS CONTINUE
The following table sets forth the name and age of each nominee and
Director; all other positions and offices, if any, now held by him or her with
the Company and his or her principal occupation during the last five years.
DIRECTORS WITH TERMS EXPIRING MAY 1998 AND NOMINEES,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS, BOARD MEMBERSHIPS (CLASS II)
LINDA G. ALVARADO
Age 45. President and Chief Executive Officer of Alvarado Construction, Inc., since prior to 1993.
Ms. Alvarado is also a director of Cyprus Amax Minerals Company and Pitney Bowes, Inc.
WILLIAM R. LOOMIS, JR.
Age 49. Chairman of the Board of Terra Industries Inc. since April 1996; Managing Director, Lazard Freres & Co. LLC, an
investment bank, since prior to 1993; General Partner in the Banking Group of Lazard Freres & Co. LLC from prior to 1993
to June 1995.
Mr. Loomis is also a director of Minorco.
JAMES V. NAPIER
Age 61. Chairman of Scientific-Atlanta, Inc., a communications manufacturing company, since prior to 1993.
Mr. Napier is also a director of Intelligent Systems Corporation, Vulcan Materials Company, HBO & Company, Personnel Group
of America, Inc. and Westinghouse Air Brake Company.
NORMA T. PACE
Age 76. Partner, Paper Analytics Associates, a planning and consulting company since 1995; Senior Advisor and Director of
WEFA Group, Inc., economic consultants and forecasters since prior to 1993.
Mrs. Pace is also a director of Hasbro, Inc.
4
DIRECTORS WITH TERMS EXPIRING MAY 1999
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE
PAST FIVE YEARS, BOARD MEMBERSHIPS (CLASS III)
BARRY W. PERRY
Age 51. President and Chief Operating Officer of the Company since 1997; Group Vice President and General Manager of the
Pigments and Additives Group prior thereto since August 1993; Group Vice President and General Manager of the Latex &
Specialty Polymers Division of Rhone-Poulenc prior thereto.
REUBEN F. RICHARDS
Age 68. Retired Chairman of the Board of Terra Industries, Inc.; Retired Chairman of the Board of Minorco (U.S.A.); Retired
Non-Executive Chairman of the Board of the Company; Chairman of the Board of Terra Industries Inc. from prior to 1993
until April 1996.
Mr. Richards is also a director of Santa Fe Energy Resources, Inc., Ecolab, Grupo Financiero Banorte and Potlatch
Corporation.
HENRY R. SLACK
Age 48. Chief Executive of Minorco since December 1992; Member of the Executive Committee of Minorco since prior to 1993,
and President and a director thereof since prior to 1993; director of Anglo American Corporation of South Africa Limited
since prior to 1993.
Mr. Slack is also a director of Terra Industries Inc.
ORIN R. SMITH
Age 62. Chairman and Chief Executive Officer of the Company since January 1995; President and Chief Executive Officer of
the Company prior thereto.
Mr. Smith is also a director of Ingersoll-Rand Company, Minorco, Perkin-Elmer Corporation, Summit Bancorp, and Vulcan
Materials Company.
5
DIRECTORS WITH TERMS EXPIRING MAY 2000,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS, BOARD MEMBERSHIPS (CLASS I)
MARION H. ANTONINI
Age 67. Principal of Kohlberg & Co. since March 1998. President and Chief Executive Officer of Welbilt Corporation from
prior to 1993 to 1998.
Mr. Antonini is also a director of Vulcan Materials Company, Scientific-Atlanta, Inc. and Northwestern Steel and Wire
Company.
ANTHONY W. LEA
Age 49. Executive Director and Member of the Executive Committee of Minorco since prior to 1993; Director of Anglo American
Corporation of South Africa since November 1993.
Mr. Lea is also a director of Terra Industries Inc.
DOUGLAS G. WATSON
Age 53. President, CEO and Director of Novartis Corporation, a life sciences company, since January 1997. President of the
Pharmaceuticals Division of CIBA-GEIGY Corporation from prior to 1993 to January 1997.
Mr. Watson is also a director of Summit Bancorp.
6
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth in the following table is the beneficial ownership of Common Stock
as of March 5, 1998 for all nominees, continuing Directors, each of the
Executive Officers listed on the Summary Compensation Table and all Directors
and Executive Officers as a group. No Director or Executive Officer owns more
than 1% of the total outstanding shares (including exercisable options) other
than Mr. Smith who owns 1.5%. All Directors and Executive Officers as a group
own approximately 2.2% of the total outstanding shares (including exercisable
options).
NAME SHARES
- ----------------------------------------------------------------------------------------------- -----------
Linda G. Alvarado.............................................................................. 9,843(1)
Marion H. Antonini............................................................................. 34,283(1)
Thomas P. Fitzpatrick.......................................................................... 6,367
Joseph E. Gonnella............................................................................. 92,388(2)
Anthony W. Lea................................................................................. 750(4)
William R. Loomis, Jr.......................................................................... 23,343(1)
James V. Napier................................................................................ 18,538(1)
Norma T. Pace.................................................................................. 27,963(1)
Barry W. Perry................................................................................. 146,697(2)
Reuben F. Richards............................................................................. 27,373(1)
Robert J. Schaffhauser......................................................................... 351,094(2)
Henry R. Slack................................................................................. 2,530(3)(4)
Orin R. Smith.................................................................................. 2,103,840(2)
Douglas G. Watson.............................................................................. 33,972(1)
All Directors and Executive Officers as a group................................................ 3,216,918(2)
- ------------------------
(1) Includes 2,250 shares of Common Stock subject to options granted to Messrs.
Antonini, Napier, Richards and Watson and Mses. Alvarado and Pace and 750
shares of Common Stock subject to options granted to Mr. Loomis under the
Company's Directors Stock Option Plan, which options may be exercised within
60 days from March 5, 1998.
(2) Includes 1,224,281, 115,700, 70,088, 223,375, and 1,841,220 shares of Common
Stock subject to options granted to Messrs. Smith, Perry, Gonnella and
Schaffhauser, and all Directors and Executive Officers as a group,
respectively, under the Company's Stock Option Plan of 1981 (the "1981 Stock
Option Plan"), the Company's Stock Option Plan of 1991 (the "Stock Option
Plan," together with the 1981 Stock Option Plan, the "Stock Option Plans")
and the Directors Stock Option Plan, which options may be exercised within
60 days from March 5, 1998 and also includes 1,157 shares owned by family
members in which persons in the group disclaim any beneficial interest.
(3) Excludes 410,433 shares of Common Stock in which Mr. Slack has an indirect
partial interest and in which he disclaims any beneficial interest.
7
(4) Excludes 2,250 shares of Common Stock subject to options granted to each of
Messrs. Slack and Lea under the Company's Directors Stock Option Plan which
are ceded to Minorco and are reflected in the Amount Beneficially Owned by
Minorco in the Section "Information as to Certain Shareholders" on page 2.
BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors of the Company held a total of 8 meetings during
1997. Among the standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee and the Stock Option/Stock Bonus
Committee. The Board does not have a nominating committee.
The members of the Audit Committee are Mr. Lea (proposed Chairman in May
1998), Ms. Alvarado, Messrs. Antonini and Loomis and Mrs. Pace, all of whom are
non-employee Directors. The Audit Committee periodically reviews the Company's
accounting policies, internal accounting controls and the scope and results of
the independent accountants' audit of the Company's financial statements. The
Audit Committee held 2 meetings during 1997.
The members of the Compensation Committee are Messrs. Antonini (Chairman),
Napier, Richards, Slack and Watson and Mrs. Pace, all of whom are non-employee
Directors. The Compensation Committee determines the appropriate level of
compensation for the Officers and employees of the Company. The Compensation
Committee held 8 meetings during 1997.
The members of the Stock Option/Stock Bonus Committee are Messrs. Antonini
(Chairman), Napier, Richards, Slack and Watson and Mrs. Pace, all of whom are
non-employee Directors. The Stock Option/Stock Bonus Committee administers the
Company's stock option and stock bonus plans and determines the terms and
conditions for the issuance of stock options and stock bonus awards to the
Officers and employees of the Company. The members of the Committee are not
eligible to participate in such plans. The Stock Option/Stock Bonus Committee
held 7 meetings during 1997.
During 1997 all of the Directors of the Company attended more than 75% of
the meetings of the Board and meetings of committees of the Board on which they
served, except for Messrs. Lea and Loomis.
Directors who are not employees of the Company each received a retainer at
the annual rate of $30,000 in 1997. In addition, non-employee Directors received
a $1,350 attendance fee for each Board meeting attended in 1997. During 1997,
non-employee Directors also received a $1,000 attendance fee for each committee
meeting attended; a $5,000 annual retainer for each committee on which they
served; and an additional $5,000 annual retainer for each chairman of a
committee. Directors who are employees of the Company do not receive any
Directors' fees or retainers.
8
Pursuant to the Company's Retirement Plan for Directors, a Director or
Director Emeritus will receive retirement benefits following his or her
retirement as a Director if at the time of such retirement either (i) he or she
has six or more years of service as a non-employee Director or (ii) his or her
age and years of service as a non-employee Director equal at least 65. Such
retirement benefits will be an annual amount equal to the annual Board retainer
fee (excluding meeting and committee fees) in effect on the date of the
Director's retirement and will be payable in equal monthly installments
commencing on the first day of the month coinciding with or next following the
Director's 65th birthday or, if later, the date of the Director's retirement and
continuing until the earlier of (i) the Director's death or (ii) the completion
of payments for a period equal to the period of the Director's service as a
non-employee Director.
Pursuant to the Company's Stock Bonus Plan for Non-Employee Directors (the
"Directors Stock Bonus Plan"), each person who becomes a non-employee Director
prior to June 30, 2006 shall be awarded 7,593 shares of the Company's Common
Stock effective as of such person's election to the Board of Directors. Such
shares will vest in equal increments over a ten-year period. Directors are
entitled to receive cash dividends on and to vote shares which are the subject
of an award prior to their distribution or forfeiture. Upon termination of the
Director's service as a non-employee Director, the Director (or, in the event of
his or her death, his or her beneficiary) shall be entitled, in the discretion
of the committee formed to administer the Directors Stock Bonus Plan, to receive
the shares awarded to such Director which have tentatively vested up to the date
of such termination of service; shares may be received prior to such date if
there has been a "change in control."
Pursuant to the Company's Directors Stock Option Plan each non-employee
Director in office on the date of the regular meeting of the Board in December
of each year will automatically be granted an option to purchase 3,000 shares of
Common Stock with an exercise price equal to 100 percent of the fair market
value at the date of grant. Each option becomes exercisable in four equal
installments, commencing on the first anniversary of the date of grant and
annually thereafter. Each option terminates on the tenth anniversary of the date
of grant. Each option held by a director which was granted more than one year
before his or her termination of service as a director shall become fully
exercisable upon termination if such termination is a result of disability,
death or retirement after attaining age 65; options may become exercisable prior
to such date if there has been an "acquisition of a control interest."
Pursuant to the Company's Deferred Compensation Plan for Directors and the
Company's Directors Stock Bonus Plan, non-employee Directors may elect to defer
payment of all or a designated portion of their compensation for services as a
Director.
9
COMPENSATION COMMITTEE INTERLOCKS, INSIDER
PARTICIPATION AND CERTAIN TRANSACTIONS
The members of the Compensation Committee are Messrs. Antonini (Chairman),
Napier, Richards, Slack and Watson and Mrs. Pace, all of whom are non-employee
Directors. Mr. Slack holds the positions with Minorco described in "Information
as to Certain Shareholders" on page 2. Minorco beneficially owns more than five
percent of the Company's voting securities. For additional information regarding
Minorco, see "Information as to Certain Shareholders" on page 2.
Among other businesses, the Company markets, fabricates and processes
various metals, minerals and ores acquired from numerous domestic and foreign
suppliers. The Company makes and will continue to make purchases, sales and
leases of such materials, in the ordinary course of its business, from and to
entities in which it is informed Anglo American and/or Minorco have a material
interest, upon terms which are no less favorable to the Company than those
obtainable from other sources. The Company's purchases and sales of such
materials from all sources during 1997 approximated $2.2 billion and $2.3
billion, respectively, including purchases of approximately $101.1 million from
and no sales to entities in which the Company is informed Anglo American has a
material interest; the Company also entered into metal leases of approximately
$16.3 million with such entities.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors and persons who own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Such Officers, Directors and
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company and written representations from the
Company's Executive Officers and Directors, all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis for
1997.
10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the compensation paid by the Company for
services rendered in all capacities during each of the last three fiscal years
to the Chief Executive Officer and the other four most highly compensated
Executive Officers. All share and per share data have been restated to give
effect to all relevant stock splits, the last of which occurred in June, 1995.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS (1)(2)
ANNUAL COMPENSATION ----------------------------
--------------------------------- RESTRICTED
BONUS STOCK OPTIONS
YEAR SALARY ($) ($)(3) AWARD(S)($)(3)(4) (#)(3)
--------- ----------- --------- ----------------- ---------
Orin R. Smith, Director,.......................... 1997 814,992 802,123 317,300 501,752
Chairman and Chief 1996 774,996 800,000 326,000 353,000
Executive Officer 1995 735,000 925,000 412,250 368,000
Barry W. Perry, Director,......................... 1997 349,992 296,000 143,640 222,786
President and Chief 1996 282,216 150,000 101,875 81,000
Operating Officer 1995 264,996 235,000 141,450 77,500
Joseph E. Gonnella,............................... 1997 304,803 203,500 96,775 139,196
Senior Vice President, Strategy 1996 190,692 125,000 84,903 65,600
and Corporate Development 1995 179,672 130,000 76,800 42,500
Robert J. Schaffhauser,........................... 1997 319,992 155,400 99,803 114,116
Vice President and 1996 306,000 160,000 108,660 82,500
Chief Technical Officer 1995 289,993 180,000 129,325 83,000
Thomas P. Fitzpatrick,............................ 1997 200,000 240,500 113,412 146,800
Vice President and 1996 -- -- -- --
Chief Financial Officer (4) 1995 -- -- -- --
- ------------------------
(1) The Company's Key Employees Stock Bonus Plan and the Company's Stock Option
Plans provide for acceleration of vesting in the event of a "change in
control." For information on what constitutes a "change in control," see
"Employment Contracts, Termination of Employment and Change in Control
Arrangements" on page 16.
(2) Currently, the Company has no Long Term Incentive Plans which are required
to be reported pursuant to the General Rules and Regulations of the
Securities and Exchange Commission.
11
(3) Includes Cash Bonus and Equity awards made in February 1998 for 1997
service, subject to adjustment as discussed in the "Report on Executive
Compensation, Annual Cash and Long Term Equity Incentive Compensation" on
page 19. As of December 31, 1997, Messrs. Smith, Perry, Gonnella and
Schaffhauser held 91,850, 15,126, 10,676 and 27,599 unvested shares,
respectively, of stock which were awarded pursuant to the Company's Key
Employees Stock Bonus Plan having a market value of $1,595,894, $262,814,
$185,496 and $479,533, respectively. The foregoing amounts do not include
the reported grants, which were made in February 1998 for services rendered
during 1997. Restricted stock awards of the Company's Common Stock granted
under the Key Employees Stock Bonus Plan vest in five equal annual
installments commencing on the first anniversary of the date of the grant.
Vesting will be accelerated upon the occurrence of a "change in control."
The Company pays dividends on restricted stock, if and to the extent paid on
Common Stock generally, but pays no dividends on stock options. For
information on what constitutes a "change in control," see "Employment
Contracts, Termination of Employment and Change in Control Arrangements" on
page 16.
(4) Mr. Fitzpatrick was elected Vice President and Chief Financial Officer on
May 1, 1997.
12
The following table sets forth information concerning individual grants of
stock options made under the Stock Option Plan in December 1997 and February
1998 for services rendered during 1997 by each of the named Executive Officers.
OPTION GRANTS FOR SERVICES RENDERED DURING 1997
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------
NUMBER
OF GRANT DATE
SECURITIES VALUE
UNDERLYING EXERCISE ------------
OPTIONS OR BASE GRANT DATE
GRANTED PRICE EXPIRATION PRESENT
(#)(1) ($/SH) DATE VALUE ($)(2)
----------- ----------- ------------- ------------
% OF TOTAL
OPTIONS
GRANTED TO
EMPLOYEES
FOR SERVICES
RENDERED
DURING
1997
---------------
Orin R. Smith........................... 394,864 13% 18.56 12/18/2007 2,104,625
106,888 4% 17.34 2/5/2008 532,302
Barry W. Perry.......................... 174,400 6% 18.56 12/18/2007 929,552
48,386 2% 17.34 2/5/2008 240,962
Joeseph E. Gonnella..................... 106,600 4% 18.56 12/18/2007 568,178
32,596 1% 17.34 2/5/2008 162,328
Robert J. Schaffhauser.................. 80,500 3% 18.56 12/18/2007 429,065
33,616 1% 17.34 2/5/2008 167,407
Thomas P. Fitzpatrick................... 108,600 4% 18.56 12/18/2007 578,838
38,200 1% 17.34 2/5/2008 190,236
- ------------------------
(1) Options have a ten-year term and vest in four equal annual installments
commencing on the first anniversary of the date of grant. Vesting will be
accelerated upon the occurrence of a "change in control." For information as
to what constitutes a "change in control," see "Employment Contracts,
Termination of Employment and Change in Control Arrangements" on page 16.
(2) Based on the Black-Scholes option pricing model. The model assumes: (a) an
option term of 4 years, which represents anticipated exercise trends for the
named Executive Officers; (b) an interest rate of 6% that represents the
current yield curves as of the grant dates; (c) an average volatility of
approximately 32% calculated using average weekly stock prices for the four
years prior to the grant date; and (d) a dividend yield of approximately
2.3% (the current dividend yield). The Company does not believe that the
values estimated by the model will necessarily be indicative of the values
to be realized by an executive.
13
The following table sets forth information concerning each exercise of stock
options during 1997 by each of the named Executive Officers and the value of
unexercised options at December 31, 1997.
AGGREGATE OPTION EXERCISES IN 1997
AND VALUES AT DECEMBER 31, 1997
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE DECEMBER 31, 1997(#) AT DECEMBER 31, 1997($)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------- --------- ------------ -------------- ------------ --------------
Orin R. Smith................. 22,375 306,716 1,046,062 1,131,052 1,401,774 267,784
Barry W. Perry................ 0 0 88,300 312,700 69,172 26,418
Joseph E. Gonnella............ 0 0 53,125 203,200 51,681 19,722
Robert J. Schaffhauser........ 0 0 177,750 257,625 206,511 65,638
Thomas P. Fitzpatrick......... 0 0 0 108,600 0 0
14
PENSION PLANS
The following table shows estimated annual pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan, as well as non-qualified supplemental pension
plans that provide benefits that would otherwise be denied participants by
reason of certain Internal Revenue Code limitations on qualified plan benefits
and provide additional credited years of service, based on remuneration that is
covered under the plans and years of service with the Company and its
subsidiaries.
PENSION PLAN TABLE
YEARS OF SERVICE
-------------------------------------------------------
FINAL AVERAGE PAY 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- --------------------------- --------- --------- --------- --------- -----------
$ 200,000.................. 43,681 58,242 72,802 87,363 101,923
300,000.................. 66,181 88,242 110,302 132,363 154,423
400,000.................. 88,681 118,242 147,802 177,363 206,923
500,000.................. 111,181 148,242 185,302 222,363 259,423
600,000.................. 133,681 178,242 222,802 267,363 311,923
700,000.................. 156,181 208,242 260,302 312,363 364,423
800,000.................. 178,681 238,242 297,802 357,363 416,923
900,000.................. 201,181 268,242 335,302 402,363 469,423
1,000,000................. 223,681 298,242 372,802 447,363 521,923
1,100,000................. 246,181 328,242 410,302 492,363 574,423
1,200,000................. 268,681 358,242 447,802 537,363 626,923
1,300,000................. 291,181 388,242 485,302 582,363 679,423
1,400,000................. 313,681 418,242 522,802 627,363 731,923
1,500,000................. 336,181 448,242 560,302 672,363 784,423
1,600,000................. 358,681 478,242 597,802 717,363 836,923
1,700,000................. 381,181 508,242 635,302 762,363 889,423
1,800,000................. 403,681 538,242 672,802 807,363 941,923
1,900,000................. 426,181 568,242 710,302 852,363 994,423
2,000,000................. 448,681 598,242 747,802 897,363 1,046,923
2,100,000................. 471,181 628,242 785,302 942,363 1,099,423
2,200,000................. 493,681 658,242 822,802 987,363 1,151,923
A participant's remuneration covered by the Company's pension plans is his
or her average monthly earnings, consisting of base salary and regular cash
bonuses, if any (as reported in the Summary Compensation Table, except as set
forth below), for the highest 60 consecutive calendar months out of the 120
completed calendar months next preceding termination of employment. With respect
to each of the individuals named in the Summary Compensation Table on page 11,
credited years of service under the plans as of December 31, 1997 are as
follows: Mr. Smith, 26 years; Mr. Perry, 4 years; Mr. Gonnella, 5 years; and Mr.
Schaffhauser, 8 years. Mr. Fitzpatrick, has
15
not yet met the eligibility requirements for participation. Messrs. Smith,
Perry, Gonnella, Schaffhauser and Fitzpatrick had $1,617,115, $645,992,
$508,303, $475,392 and $440,500, respectively, of annual remuneration covered by
the plans during 1997. Benefits shown are computed as a straight line single
life annuity beginning at age 65 and the benefits listed in the Pension Plan
Table are not subject to any deduction for Social Security or other offset
amounts.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into a three-year employment agreement with Mr.
Smith commencing May 21, 1996 and ending May 20, 1999. On May 20, 1997, Mr.
Smith's agreement was automatically extended for another year, and it will be so
extended on each May 20 thereafter unless notice of the Company's intention not
to extend shall have been given in writing no later than December 31st of the
preceding year; provided, however, that Mr. Smith's employment period shall not
extend beyond December 31, 2000. The agreement provides for an annual salary of
not less than $775,000, an annual cash bonus of at least $216,645 and an award
of at least 22,500 shares of Common Stock of the Company; provided, however,
that an annual cash bonus of at least $581,250, equity pool share awards with a
value of at least $484,375 and stock option awards with a value of at least
$1,162,500 shall be awarded to Mr. Smith if the Company's performance for any
year is greater than or equal to a predictable level of performance for such
year, as determined by the Compensation Committee. In addition, Mr. Smith is
entitled to participate in the benefit plans of the Company.
Pursuant to the Company's Change In Control Agreements, the Company provides
severance benefits in the event of a termination of an Executive (as defined),
except a termination (i) because of death, (ii) because of "Disability," (iii)
by the Company for "Cause," or (iv) by the Executive other than for "Good
Reason," within the period beginning on the date of a "Potential Change in
Control" (as such terms are defined in the Change In Control Agreement) or
"Change in Control" and ending on the third anniversary of the date on which a
"change in control" (as defined below) occurs. The severance benefits include:
(i) the payment of salary to the Executive through the date of termination of
employment together with salary in lieu of vacation accrued; (ii) an amount
equal to a pro-rated incentive pool award under the Company's Incentive
Compensation Plan, determined as set forth in the Agreement; (iii) an amount
equal to the sum of the highest annual salary and incentive pool award in effect
during any of the preceding 36 months, determined as set forth in the Agreement;
(iv) continued coverage under the Company's life, disability, health, dental and
other employee welfare benefit plans; (v) continued participation and benefit
accruals under the Company's Supplemental Retirement Program for one year
following the date of termination; and (vi) an amount sufficient, after taxes,
to reimburse the Executive for any excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended. Each of Messrs. Smith, Perry, Gonnella,
Schaffhauser and Fitzpatrick is defined as an Executive.
16
For purposes of the Company's Change In Control Agreement, a "change in
control" is triggered if one of the following occurs: (a) twenty-five percent or
more of the Company's outstanding securities entitled to vote in the election of
directors shall be beneficially owned, directly or indirectly, by any person or
group of Persons, other than the groups presently owning the same, or (b) a
majority of the Board of Directors of the Company ceases to consist of the
existing membership or successors nominated by the existing membership or their
similar successors, or (c) all or substantially all of the individuals and
entities who were the beneficial owners of the Company's outstanding securities
entitled to vote do not own more than 60% of such securities in substantially
the same proportions following a shareholder approved reorganization, merger, or
consolidation, or (d) shareholder approval of either (i) a complete liquidation
or dissolution at the Company or (ii) a sale or other disposition of all or
substantially all of the assets of the Company, other than to the Company, with
respect to which following such sale or other disposition, more than 60% of the
Company's outstanding securities entitled to vote generally in the election of
directors are thereafter beneficially owned, in substantially the same
proportions, by all or substantially all of the individuals and entities who
were the beneficial owners of such securities prior to such sale or other
disposition.
The Company's Key Employees Stock Bonus Plan and the Company's Stock Option
Plans, in which all of the Executive Officers participate, provide for the
acceleration of vesting of awards granted in the event of an acquisition of a
control interest. For purposes of the stock option and stock bonus awards
granted before March 7, 1996 under the Company's Stock Option Plan and the Key
Employees Stock Bonus Plan, an accelerated vesting is triggered if either (a) or
(b) in the above definition of "change in control" occurs. For awards made on or
after March 7, 1996, a participant under these plans will, subject to such other
conditions, if any, as the Committee may impose, receive accelerated vesting of
awards granted in the event of a "change in control," as defined above, except
that a "change in control" is triggered by twenty percent, rather than twenty-
five percent, beneficial ownership of the Company's outstanding securities
entitled to vote in the election of directors, directly or indirectly, by any
person or group of persons, other than the groups presently owning the same.
REPORT ON EXECUTIVE COMPENSATION
Under the overall direction of the Compensation Committee and the Stock
Option/Stock Bonus Committee of the Board of Directors and in accordance with
the Company's Stock Option Plan and Stock Bonus Plan approved by its
shareholders, the Company has developed and implemented compensation programs
designed to:
- Attract and retain key employees who can build and continue to grow a
successful company;
- Provide incentive to achieve high levels of company, business, and
individual performance; and
17
- Maintain and enhance alignment of employee and shareholder interests.
The Compensation and Stock Option Plan/Stock Bonus Committees are composed
entirely of non-employee Directors individually noted as signatories to this
report.
The Compensation Committee is responsible for overseeing the development and
for review and approval of:
- Overall compensation policy;
- Salaries for the Chief Executive Officer and for approximately 55 other
senior managers worldwide; and
- Aggregate cash incentive awards for the Company and specific individual
cash awards under the annual plan for the Chief Executive Officer and
approximately 55 other senior managers worldwide.
The Stock Option/Stock Bonus Committee is responsible for overseeing the
development and for review and approval of:
- Plan design and policies related to senior management and employee awards
of options and restricted stock; and
- Individual grants under the Stock Option Plan and restricted stock awards
under the Key Employees Stock Bonus Plan to the Chief Executive Officer
and approximately 340 employees worldwide.
In exercising those responsibilities and in determining the compensation in
particular of Mr. Smith and in general of other senior managers individually
reviewed, the Committees examine and set:
1. BASE SALARY
The Compensation Committee reviews salaries annually against industry
practices as determined by professional outside consultants who conduct
annual surveys. The Company's current competitive target is to pay somewhat
above the median for positions of comparable level. This target is being
achieved on average for the professional, technical, and managerial salaried
work force. Salary structures are set each year based on the Company's
target and its actual competitive position. There was a 3.0% structure
increase for 1997 for the U.S. professional, technical and managerial group
and a 3.5% adjustment for 1998. Likewise merit budgets are established based
on a competitive target, actual competitive position, and the Company's
desire to recognize and reward individual contribution. For international
employees and non-exempt salaried employees in the United States, structure
adjustments and merit budgets are determined based on local market
conditions.
Individual merit adjustments are based upon the managers' quantitative
and qualitative evaluation of individual performance, including feedback
from customers served, against business objectives such as earnings, return
on capital, market share, new customers, and
18
development of new commercial products. Performance is also considered in
the context of expectations for behavior and the individuals' positions in
their respective salary ranges--the better the performance and the lower the
position in range, the greater the percentage base salary increase.
Conversely, the lower the performance is evaluated and the higher the
position in range, the lower the percentage base salary increase.
Mr. Smith's salary was increased 6.1% for 1998 based on competitive
practice and business results, which included earnings results while funding
investments in capital expansion, research and development, joint ventures,
and acquisitions. Base salary continues to be less than one-fourth of total
compensation for Mr. Smith and generally less than one-half of total
compensation for other senior management. This reflects the Company's
emphasis on non-fixed compensation which varies with Company performance and
on other equity vehicles which are closely aligned with shareholder
interests.
2. ANNUAL CASH AND LONG TERM EQUITY INCENTIVE COMPENSATION
The Company's Management Incentive Plan integrates all incentive
compensation vehicles (including cash bonus award, restricted stock and
stock options) to link total compensation for the participant with both
competitive practice and the performance of the Company and/or applicable
business unit and the individual. The plan facilitates clarity of
performance expectations and encourages the identification and commitment to
"breakthrough" results. Overall incentive pools are established for cash,
restricted stock equity, and stock options. The pools are determined by a
formula based on competitive total compensation for comparable performance;
desired compensation mix among cash, restricted stock and options; and on
the actual performance of the Company and its business units against
specific predetermined levels of earnings targets. A threshold level is
established below which incentives will not normally be paid. The Committees
may adjust these pools up or down based on the economic climate or other
special circumstances, but did not factor any pools up or down for 1997.
Individual awards are determined based on performance against specific
objectives within the limits of the pools.
In the past, cash incentive and equity shares were granted in February
at the regularly scheduled meetings of the Compensation Committee and Stock
Option/Stock Bonus Committee. As audited financials were not available at
the time of the February Committee meetings, the awards for 1997 were based
on estimates of 1997 earnings available at that time. At future meetings of
the Committees, with audited financials available, upward adjustments may be
made. All cash incentive and equity shares shown in this Report do not
reflect any such adjustment. These earnings estimates (excluding special and
other charges) were consistent with earnings per share in a very good 1996.
These results generated the overall pools within which the individual
performance based awards were made as described below.
19
a. ANNUAL CASH INCENTIVE PROGRAM
This program is designed to provide focus on expected annual results and
recognition of accomplishment for the year. Approximately 280 employees
worldwide received awards under the Company's program.
For 1997, actual cash payouts were 97% of the competitively defined pool
as factored for performance.
For the year 1997, Mr. Smith received a cash incentive award of $802,123
compared with $800,000 for 1996. This was consistent with the plan design
considering performance and targets and the payout for the overall Company.
Total cash compensation paid to eligible participants reflects
competitive practice for results achieved and is projected to be around the
60th percentile of competitive practice -- higher in lower level positions
and lower in higher level positions.
b. RESTRICTED STOCK
Providing for vesting of shares in equal amounts over a period of five
years, the Key Employees Stock Bonus Plan is designed to align key employee
and shareholder long-term interests by providing designated employees an
equity interest in the Company. Approximately 390 employees are eligible to
participate in the Company's plan worldwide. Eligible employees are reviewed
annually for award grants determined in the manner previously described.
The total equity shares awarded for 1997 was slightly under the plan
generated pool. The Committee grants a number of equity shares which are
then converted to a combination of restricted stock and stock options.
Approximately two-thirds of the value of the equity shares, using present
value methodologies, awarded for 1997 were in the form of stock options.
This resulted in 180,368 restricted shares awarded compared with 193,369 for
1996.
For the year 1997, Mr. Smith received a grant of 17,815 shares plus
options noted below. This compares with 16,000 shares in 1996 and 17,000
shares in 1995 (adjusted for stock splits).
c. STOCK OPTIONS
The Stock Option Plan has been designed to link employee compensation
growth directly to growth in share price. In conjunction with restricted
stock, options are the major driver of senior management compensation
aligning their reward with shareholder interests. As noted above, over
two-thirds of the compensation value of equity shares was paid in the form
of options. Utilizing actuarial and financial Black-Scholes models, the
value of an option was calculated to be approximately one-third of the value
of a restricted share award.
20
In addition, approximately 80 senior managers worldwide are reviewed for
annual stock option grants determined in the manner previously described.
Options vest in equal increments over four years and normally have a
ten-year life.
Options granted for 1997 totaled 2,988,860 which was within the pool
generated. This compares with 1,868,677 granted for 1996.
For the year 1997, Mr. Smith was awarded 394,864 options plus an
additional 106,888 options representing value paid in the form of options
instead of restricted stock. The options awarded are consistent with the
plan design and the overall awards for the Company.
The Committees direct the purchase of compensation survey information from
several independent professional consultants in order to review the base, annual
cash incentive, and total compensation of Mr. Smith and other individual senior
managers and employee groups. Although there is some overlap in the compensation
comparison groups with the Dow Jones Chemicals Group used in the Performance
Graph below, for the most part they are different companies. There are two key
reasons for the divergence in samples: (1) the Company generally utilizes
standard surveys in the belief that the general lack of precision inherent in
survey methodology and compensation decision making does not normally warrant
the additional cost of specialized surveys (most of the Dow Jones Chemicals
Group do not participate in the standard surveys purchased); (2) the predominant
labor markets in which the Company competes for people differ from the Dow Jones
Chemicals Group in that they also include firms in other business line
industries, e.g., petroleum and in geographic concentrations, e.g., New Jersey.
The Committees are satisfied that relevant competitive data and achievements
of the Company against its targets in the context of the economic and
competitive environment in which the Company has operated, support the
objectives of attracting and retaining key talent, providing incentives for
superior performance, and aligning employee and shareholder interests.
Nevertheless, the Committees are engaged in a process of reevaluating the
current compensation program design, as part of their ongoing process of
oversight on such matters. It is expected that any change to compensation
programs resulting from such reevaluation would not be effective before the 1999
calendar year.
Section 162(m) of the Internal Revenue Code generally limits the deductible
amount of annual compensation paid to certain individual executive officers
(i.e., the chief executive officer and the four other most highly compensated
executive officers of the Company) to no more than $1 million. However,
qualifying performance-based compensation will be excluded from the $1 million
cap on deductibility, and the Committee believes, based on information currently
available, that the Company's stock options issued to its executive officers
qualify for this exclusion. Considering the current structure of executive
officer compensation and the availability of deferral opportunities, the
Committee believes that the Company will not be denied any significant tax
deductions for 1998. The Committee will continue to review tax consequences as
well as other relevant considerations in connection with compensation decisions.
21
COMPENSATION COMMITTEE
STOCK OPTION/STOCK BONUS COMMITTEE
Marion H. Antonini James V. Napier Norma T. Pace
Reuben F. Richards Henry R. Slack Douglas G. Watson
PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Among Engelhard Corporation, S&P 500 Index and
Dow Jones Chemical Sector
Engelhard Corporation S&P 500 Dow Jones (Chemical)
1992 100 100 100
1993 108.09 110.08 111.83
1994 99.91 111.53 129.47
1995 149.54 153.45 169.12
1996 133.66 188.68 223.43
1997 123.75 251.63 274.61
DECEMBER 31,
----------------------------------------------------------------
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
Engelhard Corporation................................. 100.00 108.09 99.91 149.54 133.66 123.75
S&P 500............................................... 100.00 110.08 111.53 153.45 188.68 251.63
Dow Jones (Chemical).................................. 100.00 111.83 129.47 169.12 223.43 274.61
- ------------------------
* Assumes $100 invested on December 31, 1992 in each referenced group with
reinvestment of dividends.
22
2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, based on the recommendation of the Audit Committee,
voted to retain Coopers & Lybrand L.L.P. to serve as independent public
accountants for the year 1998. Coopers & Lybrand L.L.P. expects to have a
representative at the meeting who will have the opportunity to make a statement
and who will be available to answer appropriate questions.
It is understood that even if the appointment is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board of Directors believes
that such a change would be in the best interests of the Company and its
shareholders.
The Board of Directors recommends that you vote FOR the ratification of the
appointment of Coopers & Lybrand L.L.P. as the Company's independent public
accountants for the year 1998.
FUTURE SHAREHOLDER PROPOSALS
The Company will not consider any shareholder proposal for inclusion in the
1999 Annual Meeting of Shareholders' proxy material unless received by the
Company not later than November 30, 1998.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors has no knowledge
of any business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, the persons named in the enclosed proxy will vote such proxy
thereon in accordance with their judgment in the best interests of the Company.
By Order of the Board of Directors
ARTHUR A. DORNBUSCH, II
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
March 31, 1998
23
[LOGO]
NOTICE OF
ANNUAL MEETING
OF
SHAREHOLDERS
AND PROXY
STATEMENT
May 7, 1998
ENGELHARD CORPORATION
101 Wood Avenue, Iselin, New Jersey 08830
Proxy Solicited on Behalf of the Board of Directors of the Company
for the Annual Meeting of Shareholders--May 7, 1998
The undersigned hereby constitutes and appoints Orin R. Smith, Reuben
F. Richards and Arthur A. Dornbusch, II, and each of them, his true and
lawful agents and proxies with full power of substitution in each, to
represent the undersigned at the Annual Meeting of Shareholders of
ENGELHARD CORPORATION to be held at The Sheraton at Woodbridge Place, 515
Route 1 South, Iselin, NJ 08830 on Thursday, May 7, 1998 at 10:00 A.M.
Eastern Daylight Savings Time and at any adjournments thereof, on all
matters coming before said meeting.
Election of Directors: Nominees: (Change of Address/Comments)
Linda G. Alvarado, William R. Loomis, Jr.,
James V. Napier and Norma T. Pace ------------------------------
------------------------------
------------------------------
------------------------------
You are encouraged to specify your choice by marking the appropriate boxes.
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxy Committee
cannot vote your share unless you sign and return this card.
SEE REVERSE SIDE
FOLD AND DETACH HERE
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, this proxy will
be voted FOR Proposals 1, 2 and 3.
Please have your name as indicated in this example X
1. Election of Directors (see reverse)
(To withhold vote for any individual nominee write that name below.)
- ------------------------------------------------------------------------------
FOR WITHHELD
2. Ratification of appointment of Coopers & Lybrand L.L.P. as independent
public accountants.
/ / For / / Against / / Abstain
3. In their discretion, upon other matters as they may properly come before
the meeting.
I Plan to attend the meeting.
Please mark, sign and return promptly using the enclosed envelope. Executors,
administrators, trustees, etc., should give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer.
- --------------------------------------------
- --------------------------------------------, 1998
SIGNATURE(S) DATED
FOLD AND DETACH HERE
Dear Shareholder(s):
Enclosed you will find material relative to the Company's 1998 Annual Meeting
of shareholders. The notice of the annual meeting and proxy statement
describe the formal business to be transacted at the meeting, as summarized
on the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. Please remember that your
vote is important to us.
ENGELHARD CORPORATION